Myanmar’s financial regulator will begin granting licences to foreign-owned insurance companies, allowing them to operate in the market by April.
“We will soon invite expressions of interest (EOI) so that foreign insurers can start operations in April or no later than May,” U Thant Sin, director of the Financial Regulatory Department under the Ministry of Planning and Finance, was quoted as saying by the Myanmar Times.
There are currently 31 representative offices of insurers from 14 countries in Myanmar. These firms are anticipating the government’s go-signal allowing full foreign investments in life insurance and joint ventures in general insurance.
According to an industry leader, foreign competition is important in order to develop Myanmar’s insurance industry.
“We need more competition to be able to provide better services,” said U Myo Min Thu, managing director of AYA Myanmar Insurance. “Because we lack human resources and skills, foreign insurance providers can help to fill this gap with technical know-how. This will help us produce better quality products and distribution channels.”
Meanwhile, U Thant Sin added that the opening up of the insurance sector to foreign investment will also deepen the bond market and gain additional funds for the government.
“If we allow foreign players in the market, we will be able to get the funds we need to develop the government bond market,” he said. “We will be asking for a large amount of capital from insurance companies to buy government bonds.
“Foreign insurers will need to fork out US$14 million for a license to provide general insurance. Once the insurance company is given the license, 30% of their required capital should be for buying government bonds,” he added.